The Verdict - Disappointed Acceptance
This article was started after the judgment was handed down and finished after the Gillingham home game so apologies for any timing inconsistencies…
Now that the decision has been made the line must be drawn. No points back, the play-offs guaranteed and 40,000 on Saturday to celebrate the incredible achievements of a football team succeeding (there is no other word for it) in the face of incredible adversity. The players now have to be motivated, driven and most of all prepared for what will hopefully be a glorious last four games of this remarkable season.
So, reluctantly, we must accept the decision of the independent arbitration panel. No, we don't necessarily agree with it, just like we didn't agree with the original decision. But, like a galling refereeing decision, it is not going to change and we must move on to much much bigger and better things and render it irrelevant in the manner we have done all season.
Just before we do though, I have to say I am left with a feeling of disappointment towards Ken Bates and his team of advisors, who were quick to tell us on judgment day that they had "done the best for the club and the fans" and who now deflect the attention by egging us on to vitriol against Paul Scally and Gillingham tomorrow (not that I need much encouragement on that score mind you - I would love to relegate them) having read the Panel's judgment, would like to like to raise a few points.
The Extent of the Main Judgment
I think the first, possibly surprising aspect was the remit of the panel. They did not, contrary to what appeared to be a common belief, seem to have any intention at looking at the “fairness” of fifteen points as a deduction and therefore do not appear to have been in any sort of position to amend the punishment i.e. 5 or 10 points back.
The basic decision was made swiftly; did the Football League, as a private member’s club, have the power, authority and discretion to impose the penalty in the manner in which it did. The answer was yes and everything else became completely irrelevant. The remainder of the judgment deals with a number of other elements but these are largely as a courtesy to the time and effort put in by the parties over the course of the arbitration. Nothing more.
Established Football League Rules
Maybe it's just me but at no time before was I told that the Football League's established rules (not ones they had to make up) actually stated that new members to the League - which LUFC, under the control of the Bates consortium, effectively were - should take an automatic relegation to the league below, in our case to League Two. This is Regulation 11 of the Football League's rules, an established rule of membership of the League.
So at the outset once the CVA was challenged by HMRC, under established League principles there were three options to the League:-
(a) demotion to League Two
(b) expulsion from the League altogether
(c) return of the golden share under the exceptional circumstances provision
In my last article, I suggested that only (b) and (c) were the available options and therefore if the circumstances were “exceptional” the golden share should be returned without qualification. For me, the appearance of the demotion option under Regulation 11 changes the complexion somewhat.
Expulsion from the League is I think excessive and unrealistic in all the circumstances and it is highly unlikely we would see any club suffer such a fate for a technical breach of the insolvency rules cased brought about by an HMRC challenge.
Demotion however, seems a less excessive and therefore more likely prospect, and I suspect that the Bates Consortium knew that this was on the horizon and had the League imposed that penalty the type of challenges made through the arbitration would simply not have been available to Leeds.
The reason I say there is a different complexion is that, according to the judgment, the Football League were required, without having to make up any new rulings, to relegate us to League Two. Not knowing this until now I, and I think most others, have operated on the assumption that expulsion was never going to happen so the only other option was “exceptional circumstances”, under which an assumption was made that the circumstances were exceptional and the share should have been transferred to the new company. Throw in the demotion requirement and you get a different picture; it is the club approaching the League, cap in hand, asking not to be relegated (which would have been absolutely disastrous) and to which the League were receptive, saying that they could either start League Two on nil points or League One on minus fifteen. This was a compromise and Leeds agreed to it.
The Club's Conduct
Another significant aspect of the judgment is the evidence and comments in relation to the conduct of Ken Bates and in particular, Mark Taylor, a solicitor and director of Leeds United 2007. It is an underlying theme of the judgment that Mr Taylor failed to act promptly in a number of instances, and receives criticism for the issuing of "misconceived" High Court proceedings, not to mention what appears to be the odd inclusion (which Mr Taylor appears never to have explained properly) of Barnsley F.C. to those proceedings to the South Yorkshire club's apparent surprise and eventual protest!
A key point made in this context by the panel is that there was no reason whatsoever that Leeds could not have instigated the Arbitration Proceedings in August 2007 and a decision reached by the end of 2007. How many times have we heard Ken Bates tell us that the delay in reaching the arbitration was the fault of the Football League? The proceedings were instigated under Rule K of the Football Association rules and there appears to be no reason whatsoever why these proceedings could not have been instigated, by Leeds, in August 2007. Even if it is the case that Mr Bates did not know of this option his legal advisers certainly should have done.
Instead what emerges is a picture of procrastination on the club's part until early-to-mid February when the writ was served, just about the time that we were falling apart on and off the pitch with terrible performances and clueless management. Just about the time that our hopes of reaching the play-offs were all but gone, coincidentally. The panel concluded that the delay, by Leeds, in bringing the arbitration proceedings was "unreasonable" and "inexcusable", and a failure by the club to instigate the proceedings led the panel to a conclusion that the club (the management, not the supporters) were less bothered about the fifteen points in August.
Future Consistency
Stage two, if required, is the appeal to the other Football League chairmen. With the greatest of respect to the Unlucky Three, they are hardly the type of clubs to stir the emotions amongst rival clubs and supporters in the way Leeds United are. However good a side they are, Bournemouth's away fixtures will not bring about the pay day of the season for the home side, nor will the clubs in the division above want to keep them suppressed for fear of their own ambitions being thwarted in the same way that clubs in the division below won't give two hoots about whether they come down into their league or not. The same goes for Luton and Rotherham. It is fair to say, that in real footballing terms, the Unlucky Three simply don't matter (other than to their own supporters) as much as Leeds United. As a Leeds fan who just wants his club to get on with their football without all the side-show nonsense this is not a boast, believe me. But it is relevant because the appeal process is a free vote for the club chairmen; I'm not sure that because a chairman voted against Leeds to uphold the points deduction, this would oblige him to vote the same way again when faced with the same bare facts (administration and CVA failure) but against a different set of contextual circumstances. The same goes for the few chairmen who voted in Leeds' favour; they have a similar discretion to change their minds. Otherwise what is the point of the appeal?
Now that the decision has been made the line must be drawn. No points back, the play-offs guaranteed and 40,000 on Saturday to celebrate the incredible achievements of a football team succeeding (there is no other word for it) in the face of incredible adversity. The players now have to be motivated, driven and most of all prepared for what will hopefully be a glorious last four games of this remarkable season.
So, reluctantly, we must accept the decision of the independent arbitration panel. No, we don't necessarily agree with it, just like we didn't agree with the original decision. But, like a galling refereeing decision, it is not going to change and we must move on to much much bigger and better things and render it irrelevant in the manner we have done all season.
Just before we do though, I have to say I am left with a feeling of disappointment towards Ken Bates and his team of advisors, who were quick to tell us on judgment day that they had "done the best for the club and the fans" and who now deflect the attention by egging us on to vitriol against Paul Scally and Gillingham tomorrow (not that I need much encouragement on that score mind you - I would love to relegate them) having read the Panel's judgment, would like to like to raise a few points.
The Extent of the Main Judgment
I think the first, possibly surprising aspect was the remit of the panel. They did not, contrary to what appeared to be a common belief, seem to have any intention at looking at the “fairness” of fifteen points as a deduction and therefore do not appear to have been in any sort of position to amend the punishment i.e. 5 or 10 points back.
The basic decision was made swiftly; did the Football League, as a private member’s club, have the power, authority and discretion to impose the penalty in the manner in which it did. The answer was yes and everything else became completely irrelevant. The remainder of the judgment deals with a number of other elements but these are largely as a courtesy to the time and effort put in by the parties over the course of the arbitration. Nothing more.
Established Football League Rules
Maybe it's just me but at no time before was I told that the Football League's established rules (not ones they had to make up) actually stated that new members to the League - which LUFC, under the control of the Bates consortium, effectively were - should take an automatic relegation to the league below, in our case to League Two. This is Regulation 11 of the Football League's rules, an established rule of membership of the League.
So at the outset once the CVA was challenged by HMRC, under established League principles there were three options to the League:-
(a) demotion to League Two
(b) expulsion from the League altogether
(c) return of the golden share under the exceptional circumstances provision
In my last article, I suggested that only (b) and (c) were the available options and therefore if the circumstances were “exceptional” the golden share should be returned without qualification. For me, the appearance of the demotion option under Regulation 11 changes the complexion somewhat.
Expulsion from the League is I think excessive and unrealistic in all the circumstances and it is highly unlikely we would see any club suffer such a fate for a technical breach of the insolvency rules cased brought about by an HMRC challenge.
Demotion however, seems a less excessive and therefore more likely prospect, and I suspect that the Bates Consortium knew that this was on the horizon and had the League imposed that penalty the type of challenges made through the arbitration would simply not have been available to Leeds.
The reason I say there is a different complexion is that, according to the judgment, the Football League were required, without having to make up any new rulings, to relegate us to League Two. Not knowing this until now I, and I think most others, have operated on the assumption that expulsion was never going to happen so the only other option was “exceptional circumstances”, under which an assumption was made that the circumstances were exceptional and the share should have been transferred to the new company. Throw in the demotion requirement and you get a different picture; it is the club approaching the League, cap in hand, asking not to be relegated (which would have been absolutely disastrous) and to which the League were receptive, saying that they could either start League Two on nil points or League One on minus fifteen. This was a compromise and Leeds agreed to it.
The Club's Conduct
Another significant aspect of the judgment is the evidence and comments in relation to the conduct of Ken Bates and in particular, Mark Taylor, a solicitor and director of Leeds United 2007. It is an underlying theme of the judgment that Mr Taylor failed to act promptly in a number of instances, and receives criticism for the issuing of "misconceived" High Court proceedings, not to mention what appears to be the odd inclusion (which Mr Taylor appears never to have explained properly) of Barnsley F.C. to those proceedings to the South Yorkshire club's apparent surprise and eventual protest!
A key point made in this context by the panel is that there was no reason whatsoever that Leeds could not have instigated the Arbitration Proceedings in August 2007 and a decision reached by the end of 2007. How many times have we heard Ken Bates tell us that the delay in reaching the arbitration was the fault of the Football League? The proceedings were instigated under Rule K of the Football Association rules and there appears to be no reason whatsoever why these proceedings could not have been instigated, by Leeds, in August 2007. Even if it is the case that Mr Bates did not know of this option his legal advisers certainly should have done.
Instead what emerges is a picture of procrastination on the club's part until early-to-mid February when the writ was served, just about the time that we were falling apart on and off the pitch with terrible performances and clueless management. Just about the time that our hopes of reaching the play-offs were all but gone, coincidentally. The panel concluded that the delay, by Leeds, in bringing the arbitration proceedings was "unreasonable" and "inexcusable", and a failure by the club to instigate the proceedings led the panel to a conclusion that the club (the management, not the supporters) were less bothered about the fifteen points in August.
Future Consistency
If there seems to have been one common denominator amongst the speculation, it is that if the deduction is upheld, a precedent is now set. Having read the judgment, however, this appears not to be the case.
Criticism of Leeds' tactics in the arbitration is, in effect, immaterial because the main thrust of the decision is that the League had the relevant authority, and discretion, to make the decision it made. There was no specific question about whether the 15 points was fair because if the League made the decision properly and with appropriate authority, the fairness aspect is implied.
Furthermore and most importantly the panel were at pains to point out, in its postscript, that the...
"15 points in the [Leeds] case was not (and was not intended to be) a precedent i.e. an automatic sanction in the absence of a CVA. Each case has to be assessed by the League having regard to the Club's individual circumstances leading up to and of the insolvency itself. Such Conditions as the League considers are required will reflect these circumstances and any merits the club can establish."
We expected as follows in future instances:-
Criticism of Leeds' tactics in the arbitration is, in effect, immaterial because the main thrust of the decision is that the League had the relevant authority, and discretion, to make the decision it made. There was no specific question about whether the 15 points was fair because if the League made the decision properly and with appropriate authority, the fairness aspect is implied.
Furthermore and most importantly the panel were at pains to point out, in its postscript, that the...
"15 points in the [Leeds] case was not (and was not intended to be) a precedent i.e. an automatic sanction in the absence of a CVA. Each case has to be assessed by the League having regard to the Club's individual circumstances leading up to and of the insolvency itself. Such Conditions as the League considers are required will reflect these circumstances and any merits the club can establish."
We expected as follows in future instances:-
1. Administration = 10 point deduction
2. Failure to return to the league with an approved CVA = 15 point deduction
2. Failure to return to the league with an approved CVA = 15 point deduction
Myself included, we expected that Rotherham, Bournemouth and Luton ("the Unlucky Three") would suffer the same fate as us. Not so.
The decision vindicates the League in using absolute discretionary powers to create the 15 point penalty but, crucially, considers the extent of the deduction to be particular to the circumstances of the Leeds case. One suspects that the League looked at the circumstances in the round; not only the manner in which Bates took the ten-point hit on administration, conducted the "pre-pack" administration and the initially ratified CVA, along with the failure itself to successfully deal with the HMRC challenge, but this probably also looked back at the destructive financial mismanagement of the Ridsdale era, for which it cannot be disputed that the position the club was in at the end of the 2006-2007 season was a direct and absolutely foreseeable consequence.
By validating the discretionary powers of the League and further stating that no precedent should be created by the decision we end up with no closure on the matter in real terms; the crucial element is that the level of punishment dished out to Leeds was based on the League’s view of the circumstances surrounding the conduct and activities of the club over a period of time preceding the decision. They will do the same in the case of the Unlucky Three but of course may not reach the same verdict.
The question on everyone’s lips has always been “what did Leeds do wrong?” What were those circumstances, conduct and activities which justified the fifteen point deduction? The major difficulty in accepting the panel’s decision is that, factually speaking, we are not sure what those are because all of the deliberations of the Football League have been private, as has the evidence placed before the panel. This, if you like, is the Bates’ consortium continued protest. My suspicions aside, the Football League have deducted 15 points but have not been clear why that penalty has been applied, aside from effectively saying “because we can”. I have told you my suspicions above, to be viewed in the context of Regulation 11, but those suspicions have never been confirmed by the Football League. See Ken Bates’ continued comments over the last nine months. He is a confident man but if the information revealed by the judgment is anything to go by, pushing this point to revelation may be opening an unseemly can of worms.
So looking at the use of the two-stage process going forward:-
Stage one is the Football League's decision on application by the defaulting club to allow a club to recover the golden share under the "exceptional circumstances" provision. The League, we now know, has absolute discretion in the decision-making process. What if the Unlucky Three create a CVA approved almost unanimously by their creditors who all think they are getting a fantastic deal? What if there are no rumours of offshore companies and ambiguities about who owns what, no third parties publishing dossiers on the existing chairman or getting into spats in newspapers about who, when or what is best for the club, no immediate history of financial suicide? The League is well within its rights to use its discretion under the "exceptional circumstances" rules and, in the circumstances, to simply hand the golden share back without the deduction.
The decision vindicates the League in using absolute discretionary powers to create the 15 point penalty but, crucially, considers the extent of the deduction to be particular to the circumstances of the Leeds case. One suspects that the League looked at the circumstances in the round; not only the manner in which Bates took the ten-point hit on administration, conducted the "pre-pack" administration and the initially ratified CVA, along with the failure itself to successfully deal with the HMRC challenge, but this probably also looked back at the destructive financial mismanagement of the Ridsdale era, for which it cannot be disputed that the position the club was in at the end of the 2006-2007 season was a direct and absolutely foreseeable consequence.
By validating the discretionary powers of the League and further stating that no precedent should be created by the decision we end up with no closure on the matter in real terms; the crucial element is that the level of punishment dished out to Leeds was based on the League’s view of the circumstances surrounding the conduct and activities of the club over a period of time preceding the decision. They will do the same in the case of the Unlucky Three but of course may not reach the same verdict.
The question on everyone’s lips has always been “what did Leeds do wrong?” What were those circumstances, conduct and activities which justified the fifteen point deduction? The major difficulty in accepting the panel’s decision is that, factually speaking, we are not sure what those are because all of the deliberations of the Football League have been private, as has the evidence placed before the panel. This, if you like, is the Bates’ consortium continued protest. My suspicions aside, the Football League have deducted 15 points but have not been clear why that penalty has been applied, aside from effectively saying “because we can”. I have told you my suspicions above, to be viewed in the context of Regulation 11, but those suspicions have never been confirmed by the Football League. See Ken Bates’ continued comments over the last nine months. He is a confident man but if the information revealed by the judgment is anything to go by, pushing this point to revelation may be opening an unseemly can of worms.
So looking at the use of the two-stage process going forward:-
Stage one is the Football League's decision on application by the defaulting club to allow a club to recover the golden share under the "exceptional circumstances" provision. The League, we now know, has absolute discretion in the decision-making process. What if the Unlucky Three create a CVA approved almost unanimously by their creditors who all think they are getting a fantastic deal? What if there are no rumours of offshore companies and ambiguities about who owns what, no third parties publishing dossiers on the existing chairman or getting into spats in newspapers about who, when or what is best for the club, no immediate history of financial suicide? The League is well within its rights to use its discretion under the "exceptional circumstances" rules and, in the circumstances, to simply hand the golden share back without the deduction.
Stage two, if required, is the appeal to the other Football League chairmen. With the greatest of respect to the Unlucky Three, they are hardly the type of clubs to stir the emotions amongst rival clubs and supporters in the way Leeds United are. However good a side they are, Bournemouth's away fixtures will not bring about the pay day of the season for the home side, nor will the clubs in the division above want to keep them suppressed for fear of their own ambitions being thwarted in the same way that clubs in the division below won't give two hoots about whether they come down into their league or not. The same goes for Luton and Rotherham. It is fair to say, that in real footballing terms, the Unlucky Three simply don't matter (other than to their own supporters) as much as Leeds United. As a Leeds fan who just wants his club to get on with their football without all the side-show nonsense this is not a boast, believe me. But it is relevant because the appeal process is a free vote for the club chairmen; I'm not sure that because a chairman voted against Leeds to uphold the points deduction, this would oblige him to vote the same way again when faced with the same bare facts (administration and CVA failure) but against a different set of contextual circumstances. The same goes for the few chairmen who voted in Leeds' favour; they have a similar discretion to change their minds. Otherwise what is the point of the appeal?
Having said all of this, the panel recognised the folly of putting such an appeal before the other member clubs and has recommended not just an amendment to the second stage but also a revision and settling of the Football League’s insolvency rules over the summer.
There was an excellent post mortem article by Rick Broadbent in Friday’s The Times.
The Future
So, it is done (as are Gillingham, Mr Scally). We move on. Carlisle await us in the play-offs as does, hopefully, a fantastic day out at Wembley against either Doncaster Rovers or Southend United and, ultimately, promotion to the Championship on our way back to the Premier League.
The Gillingham game was a bit of a non-event to be honest, bearing in mind the crowd assembled to watch it. But, if nothing else, I once again take my hat off to Gary McAllister who I criticised for playing a weakened side when he should be maintaining momentum but he got the appropriate response and a sixth win in seven games. He also has fresh players chomping at the bit for 12th May.
After this season we must forget the 15 point issue because it will only serve to frustrate us in the future when the League applies more lenient penalties or settles new written Regulations which are out of line with the way we were treated. We do have an amazing opportunity before us to do nothing but play football and achieve great things doing so. We have represented everything which is ugly about the game over the last six years; greed, indulgence, crime, violence, and the disappearance of any link between player and supporter, and we have come out the other side whilst the rest of the game (especially at Premier League level) continues to appear ruined by those very factors.
On on on.
The Future
So, it is done (as are Gillingham, Mr Scally). We move on. Carlisle await us in the play-offs as does, hopefully, a fantastic day out at Wembley against either Doncaster Rovers or Southend United and, ultimately, promotion to the Championship on our way back to the Premier League.
The Gillingham game was a bit of a non-event to be honest, bearing in mind the crowd assembled to watch it. But, if nothing else, I once again take my hat off to Gary McAllister who I criticised for playing a weakened side when he should be maintaining momentum but he got the appropriate response and a sixth win in seven games. He also has fresh players chomping at the bit for 12th May.
After this season we must forget the 15 point issue because it will only serve to frustrate us in the future when the League applies more lenient penalties or settles new written Regulations which are out of line with the way we were treated. We do have an amazing opportunity before us to do nothing but play football and achieve great things doing so. We have represented everything which is ugly about the game over the last six years; greed, indulgence, crime, violence, and the disappearance of any link between player and supporter, and we have come out the other side whilst the rest of the game (especially at Premier League level) continues to appear ruined by those very factors.
On on on.
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